Chapman Fraud Trial Winds Down

July 30, 2004 (PLANSPONSOR.com) - A former money
manager for the Maryland state pension system abused the
trust of thousands of retirees by using their money for his
benefit, a federal prosecutor charged in his closing
arguments in a high-profile pension fraud case.

“You don’t get to use the assets of the system for
your own benefit,” Assistant US Attorney Craig Wolff told
jurors, the Associated Press reported as Nathan Chapman
Jr., trial wound down.

Despite prosecutors’ allegation, Chapman attorney
contended his client’s conduct was “a far, far cry from a
scheme to defraud.” William Martin argued that the
government created a “convoluted theory” of wrongdoing to
“see what sticks” after failing to make a public
corruption case against former Maryland Governor Parris
Glendening, who appointed Chapman to the state university
system’s Board of Regents. “They’re out to get Mr.
Chapman,” Martin charged, according to the AP.

Chapman, 46, is accused of mail fraud, wire fraud,
securities fraud and other crimes in the use of
retirement system funds to boost his ailing company’s
stock price (See
Chapman Pleads Not
Guilty in Maryland Fraud Case
). The $29 billion retirement system, which is
responsible for the pensions of more than 250,000
teachers, police officers, firefighters and other
government workers, lost nearly $5 million in the
transactions.

Chapman managed more than $100 million in funds for
the retirement system. He managed funds from 1996 until
its trustees fired him in January 2002.

Wolff told jurors that Chapman was repeatedly
warned about potential conflicts of interest when he
invested pension funds into his company. “There was a
scheme to defraud here,” Wolff told jurors, who have
often heard testimony about complex business transactions
during the six-week trial in US District Court in
Baltimore.

If convicted, Chapman could go be sentenced to 10
years or more in prison. Jurors were scheduled to
begin deliberations Monday.